It is common practice for consumers to pay a merchant electronically for goods or services received. Electronic payments are typically made with a token that identifies a source of funding. For example, a credit card containing a magnetic strip is a token. Payment tokens usually contain static information, such as an account number, identifying a source of payment. When a credit card is swiped, the card number is transmitted to a centralized payment processing system. Before authorizing payment, the centralized payment processing system may verify whether the account exists and is active, whether the account can fund the transaction, or whether the transaction may be fraudulent. A physical token such as a credit card cannot be easily modified and, in the event that it is lost or stolen, the consumer must report the lost card and wait for a replacement to be mailed. As a result, systems that allow a consumer to pay for a transaction at the point of sale (POS), using a mobile device to display a token (usually in the form of a barcode or QR code), are becoming widely accepted. Similar to credit-card tokens, mobile device tokens typically contain static information that must be transmitted to a centralized payment processing system for authentication and payment authorization.
If the centralized payment-processing system or the merchant system loses network access (e.g., a network problem, a system power outage, a system fire, a system bug, or the like), however, the token cannot be used for payment without significant risk of fraud. Some merchants may copy (e.g., take a credit-card imprint) or otherwise save the consumer's account information or token, deliver goods to the consumer, and attempt to process the payment at a later time when the network is restored. But if the token is a fraud, the merchant will not get paid. In addition, the mere act of copying account information creates a risk of theft for the owner of the token.
Accordingly, a system that protects both the consumer and the merchant from the risk of fraud regardless of network availability is needed.